Nothing changes for Fang. Full attack while grappled (-4 penalty of course). The concealment still applies while grappled for actual attacks, right, just not grapple checks?
OOC: Holy smokes! A 23 misses a pile o' junk! Where the $@!* did you find this creature?
I'm not sure what's happening. Is Fang pinned? Can he not attack the junk pile as normal? If he's essentially pinned, then I guess his only option is to break out of the pin. With any remaining grapple checks, he will attempt to escape the grapple.
OOC: I am going to revise what I said above. If Fang attacks at -4, half of the resulting damage will be applied to Junkie and half will be applied to himself.